Human Resource Management-Saudi Arabia

Introduction

The Saudi Arabia General Investment Authority (SAGIA) is an organization well-known in 2000 to perk up the business surroundings and give confidence foreign speculation in the Kingdom of Saudi Arabia. This organization was shaped out of the Kingdom's landmark Foreign Investment Law of 2000 with the permission to broaden your horizons of economy and endow with jobs for its escalating young population.
The hatchling agency was predictable to procure the prop up of other government ministries and agencies in tumbling obstructions to investment-including the politically susceptible "Saudiazation" plan, which gave service partiality to Saudis over overseas workers-and in advertising Saudi Arabia as a convivial location for remote investors. However, the commandment that had formed SAGIA, gave it a small amount of tools to work with. Therefore, it had to stumble on a way to oblige with the rest of the government to consequence change. SAGIA's first governor, Prince Abdullah, retired in 2004, and it would be the core of his descendant, Amr Al Dabbagh, to precede SAGIA's mission. It remnants to be seen whether Al Dabbagh, a triumphant businessman could surmount the challenges that had thus far obstructed the young agency.

Issues arise

To perk up the country business surroundings and give confidence foreign business investment in the kingdom of Saudi Arabia; the complicatedness of association across the government bureaucracy with little power or possessions; effecting revolutionize in an inauspicious political climate - both exterior and internal; human capital expansion with the skill for premeditated planning and communications; and the brunt of an individual self-motivated leader of an organization.

                                                     Firm Current Situation:

Saudi Arabia economic trumpets have provided momentous chances for the government to make targeted strategic changes and investments to put down the foundation for a sustainable augment in the Kingdom’s long-term rate of economic development. This chance has been coupled with determined hallucination on the part of His Majesty King Abdullah, curator of the Two Holy Mosques, to give confidence the economy’s progression and diversification afar the petroleum sector. Although Saudi Arabia is the world's prevalent oil exporter, it is not able to fully utilize its cutthroat advantage in petrochemicals due to the closed natural history of the EU market. In fact, Saudi Arabia significance base oil from Europe in order to formulate lube oil. The EU has somehow administered to eliminate the oil producers in the region from some of the downstream processing. WTO accession guaranteed to revolutionize this and will make Saudi Arabia a most important petrochemical manufacturer in the world.

Furthermore, with attainment to the WTO Saudi Arabia can capitalize on its aggressive benefit where it has a accepted advantage. The kingdom has the cheapest nourish stockpile in the world. Nourish stocks (natural gas, natural gas liquids or naphtha out of oil) are desirable to make petrochemicals. The fee to Saudi Arabia is underneath $2 a container whether it is in a gas container corresponding or in oil. This permits Saudi Arabia to establish taking over the marketplace. Germany is the major manufacturer of petrochemicals in the world today. Notwithstanding Saudi Arabia individual the third-largest exporter of German products, Germany does not oblige with Saudi Arabia in petrochemicals or any energy-based industry. By 2015 Saudi Arabia is predictable to materialize as the major producer of petrochemicals in the world.

Competitive profile, benchmarking

Another imperative improvement is characteristic gas. Common gas is sold by Saudi Aramco to the users, whether they are electrical energy companies, water desalination companionship, SABIC or the confidential sector at 75 cents per million BTUs or the comparable of $4.35 per barrel. The Germans, who are challenging with the Saudis, are selling at the equivalent of $62 a barrel today. Hence there is an mammoth difference between the two.

Other major fields where there is much impending for investment is in the power, agriculture and transport sectors where there are massive opportunities and confronts available to foreign investors.

Equipped by record hydrocarbon revenues and gigantic financial, treasury of more than US $500 billion, Saudi Arabia has the aptitude to persist spending heavily on the rise its economy for many years to the fore, apart from of the price of oil.

Action Plan

Within the next three years new phosphates, aluminum and iron melting industries will add billions of dollars yearly to the financial system. Much of this new industry and business improvement in the Kingdom is planned to be led or attain in partnership with both domestic and foreign investors. Prospects for augmented trade and speculation between the UK and Saudi Arabia are momentous and expanding this. The Kingdom is positioned eighth among the world's ten highest intensification economies by the International Monetary Fund (IMF).Regular visits at Prime Ministerial and Ministerial level underline the significance of the bilateral relationship, while enduring close contact between the British and Saudi Royal families highlights the profundity of the relationship. The country’s 2013 national budget exemplifies the need for Saudi Arabia to linger a key target for British export efforts. It visualizes State spending of US$218.7 billion, 19% up on 2012, with revenues projected to reach US$320.6 billion.  

The Kingdom proposes to spend more than US$367 billion over the next ten years on a wide range of communications investments. Ambitious plans include thousands of kilometers of new roads and railways, as well as airport expansion, new urban transport systems, investments in water, sewerage, power plants, telecoms and the IT sector and the construction of four million new homes. Leading investment areas also include development of oil & gas facilities, the petrochemicals sector, mining and the development of new economic cities.

The non-oil economy is of growing importance, with petrochemical sales at around US$12 billion a year. Saudi Basic Industries Corporation (SABIC) has achieved production in excess of 50 million tonnes a year of chemicals and intermediates, industrial polymers, fertilizers and metals and is a significant force in the global petrochemicals market.

Resources/techniques helpful to opening up the case study

SABIC, is 70% government owned and the Kingdom’s biggest and most diversified assembling organization, dynamic in chemicals and intermediates, mechanical polymers, manures and metals. A joint venture of the country’s oil producer, Saudi Aramco and Dow Chemical, will add to petrochemical output when a US$20 billion integrated complex comes on stream in an expanded Jubail Industrial City in 2016. This wander, known as Sadara Chemical Company, is forecast to become one of the world’s largest industrial companies.  The Government is focusing a large part of its spending plan on the development of an ambitious industrial diversification strategy. This is based on the creation of new economic cities and industrial clusters in sectors unrelated to oil production. The strategy seeks to promote regional economic development and generate hundreds of thousands of new jobs for the local population.  The projects are not only aimed at nurturing new industries but also at providing attractive residential communities, with social and educational infrastructure developed to international standards, where people will want to settle for lifestyle and jobs.

Electricity generation also needs to grow substantially to cope with the demands of an expanding population and industrial development. This is creating opportunities along the whole supply chain for building acquisition, gear suppliers, sub-builders and consultants. An estimated US$90 billion is expected to be invested in water, sewerage and power projects over the next ten years. Long discussed improvements to urban transportation are also likely to go ahead. Finance Minister, HE Dr. Ibrahim Al-Assaf, says that US$53 billion from the country’s 2012 surplus is to be allocated to additional transport spending in 2013, mainly on mass transport systems in Riyadh, Jeddah, Dammam and Mecca. These are huge projects and will create multiple contract opportunities over several years for suitably qualified UK companies.

Alternate Resources/Solutions:

One sector where British firms are clearly leaders in the Saudi market is defense. For almost half a century following the supply of British Lightning fighters in the 1960s, defense sales have constituted one of the pillars of UK/Saudi relations. The Al Yamamah military agreement to supply the Royal Saudi Air Force (RSAF) with Tornado aircraft in 1985 represented the largest ever export contract won by the UK.  This relationship, augmented by investment offset agreements, was reinforced with the signing of the Al Salam contract in 2008, to provide Typhoon fighters and other equipment to the RSAF.  Saudi Arabia continues to spend heavily on the modernization and expansion of its armed forces and security agencies. In 2012, BAE Systems signed a US$3 billion contract to supply 22 Hawk trainer jets to the Saudi Air Force.  Defense and internal security remain major areas of opportunity, with an increasing emphasis on technologies, where UK companies have proven abilities. Anything that plays to the “Saudiazation” agenda and domestic manufacturing is favored, whether civil or military. The Al Salam guard bargain, for instance, stipulates that an airplane production line for the Typhoon will be established in Dhahran. Offset investment deals related to previous defense contracts have seen a number of joint ventures, civil and military, established in the Kingdom, including a Tate & Lyle sugar refinery and a GSK pharmaceutical manufacturing plant. Such speculations mix well with the Saudi Government's wish to develop a broader and more private-sector based economy and equip graduates who are currently unemployed with the right skills.

The proportion of private sector schemes is likely to rise in future as the Government seeks greater private sector participation in venture improvement. This is liable to be reflected in private division power improvements, water and wastewater ventures and inland advancement. 

PESTLE Analysis

Political: Provinces are divided into governors, district and centers. The king council’s of minister is appointed by the king after every four years. All the business and oil system is under control of ministries that are part of the cabinet. There is no rule for the election as well as no political parties.

Economical: Saudi Arabia was an economy based on subsistence agriculture by a population that was largely itinerant until the discovery of oil. After the oil discovery it becomes one of the wealthiest nations. It is the largest exporter of petroleum industry.

Social: Its culture is based on Islamic values and it is a culturally rich country. Social problems are efficiently controlled by government because of the justice system.

Technological: According to new government policy the country’s economy becomes less reliant on the oil market. Companies and services came under privatization sector. This will promote the research and development sector (this will promote the research and development sector.)

Environmental: General natural regulation is the administration approved association determines to proscribe and line of attacks that may be planned for the control of environmental effects.

Competitiveness of Petroleum Industry:

Firm strategy and rivalry: Saudi Arabia has demonstrated their core competency in the global oil marketplace. Strategy is to focus on all the petroleum products by establishing the company called SAGIA.

Demand Conditions: Saudi Arabia consume and use 25% of petroleum products which demonstrate comparatively high demand of local customers to this product.

                                        SWOT Analysis

Strength:

·         Strong Oil and Gas Reserves

·         Large refining and petrochemical bases

Weaknesses:

·         Unemployment

·         Increase in population

·         Need of higher paying job

·         Concentration of Reserves

·         Lack of worldwide Retailing network

Opportunities:

·         Foreing JVs for expansion

·         Development of ruby project

Threats:

·         Risk of terrorist attack on energy facilities

·         New competition

Conclusion

The accession of Saudi Arabia to the World Trade Organization in December 2005 set the stage as the Government showed that subsidies to state owned industries were to be scaled back and management of utilities gradually handed over to the private sector. Saudi Arabia is pursuing investments and reforms that the Government is determined will position the Kingdom as one of the world’s most competitive economies by the beginning of the next decade. In 2011, the Kingdom achieved its aim of attaining a top ten ranking in the World Bank’s “Doing Business" Report, which tracks 183 economies and screens how easy it is in them, to start medium to small scale enterprises. While this ranking has since slipped slightly, Saudi Arabia General Investment Authority (SAGIA) is now also seeking a top 15 ranking for the Kingdom in the World Economic Forum’s “Global Aggressiveness" Report. These aspirations are demonstrative of how the business environment in Saudi Arabia is gradually improving for foreign investment. The result is an increasingly competitive market.  While abundant opportunities lie ahead for British firms, contracts are seldom easily won in Saudi Arabia. Building relationships requires patience and perseverance in a country that, while modernizing and growing its economy, is profoundly progressive. Conventional standards apply and business is not concluded quickly. However, the rewards for those willing to run the course are likely to be immense and long lasting.

Recommendation:

Saudi Sagia and Aramco don’t have global network gas stations like other integrated companies. Saudi should take the benefits of production plant in other countries through joint ventures strategies. The advantage of using its own name on petroleum products is to create more brand recognition by consumers. This would also facilitates earn better profit margin.